Question

Hyperion​ Inc., currently sells its latest​ high-speed colour​ printer, the Hyper​ 500, for $ 362. Its cost of goods sold for the Hyper 500 is $ 207 per​ unit, and this​ year's sales​ (at the current price of $ 362​) are expected to be 25 comma 000 units. Hyperion plans to lower the price of the Hyper 500 to $ 310 one year from now.

a. Suppose Hyperion considers dropping the price to $ 310 ​immediately, (rather than waiting one​ year). By doing so it expects to increase this​ year's sales by 22 % to 30,500 units. What would be the incremental impact on this​ year's EBIT of such a price​ drop?

b. Suppose that for each printer​ sold, Hyperion expects additional sales of $ 69 per year on ink cartridges for the​ three-year life of the​ printer, and Hyperion has a gross profit margin of 77 % on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately​ (rather than waiting one​ year)?

. Suppose Hyperion considers dropping the price to $310 ​immediately, (rather than waiting one​ year). By doing so it expects to increase this​ year's sales by 22% to 30,500 units. What would be the incremental impact on this​ year's EBIT of such a price​ drop?

The change in EBIT will be ​$____ ​(Round to the nearest​ dollar.)

b. Suppose that for each printer​ sold, Hyperion expects additional sales of $69 per year on ink cartridges for the​ three-year life of the​ printer, and Hyperion has a gross profit margin of 77% on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately​ (rather than waiting one​ year)?

The change in EBIT from ink cartridge sales will be $___. ​(Round to the nearest​dollar.)

The incremental change in EBIT for the first year is ​$___.​(Round to the nearest​dollar.)

The incremental change in EBIT for the second year is $__.​(Round to the nearest​dollar.)

The incremental change in EBIT for the third year is $___.​(Round to the nearest​dollar.)

Answer 1